The housing market... oh my god..

Despite it taking up the lead article on today's SS Times and the first few pages of newspapers for the last six months I have to wonder...

...in the scheme of things, who give a monkey's uncle?

Really, how important is the sale of private houses to the New Zealand economy? Dick all. It is merely a radar for the rising (or falling) cost of things.. things which change year to year and will do forever.

Basically, it will rise/fall, come/go no matter what. It largely cannot be controlled/managed either. So why is it the main story so often? Aren't there more important things to write about?

R

Because if house prices increase as a percentage of yearly income, then obviously there are problems.

The media may as well chart the price of P in that case too.

R

I wasn't aware that P was as essential as housing, but I guess I don't hang in the same circles as you, Rob

its not just because housing has a roof which people live under tho, its important to the media because its important to most NZ'ers because we, more than nearly every other country, have all our personal wealth tied up in it. When house prices go down everybody feels poorer and behaves accordingly.

or mine

I watched this recently and found it interesting. It's an amature video captured from a lecture by Steve Keen. Have a watch, it's long though and may not be everyones thing but it contains a lot of economic data and discussion on this very notion.

It's about trends in Australia with comparisons to other western countries, particularly in housing values in proportion to debt and GDP etc.

http://video.google.com/videoplay?docid=1375113008927627575

And in addition to this, news about house prices sells newspapers ... hence news and 'in depth' feature articles about house prices are in the newspapers all the time.

I just refinanced my major loan of $81k at 9.7% cf previously 6.99% Its now gonna cost me $60 a fortnight more. Annoying but not significant.

But you do that for people with 2-3 hundred thousand sized loans (given the cost of a house I reckon there must be heaps of people out there who have borrowed that much or more), and if they are already feeling the pinch a bit from petrol/dairy price increases etc... then its going to start to hurt the economy. Still this thread is more about falling house prices so maybe not so relevant except when too many people start to feel the pinch then they get forced to either downsize or give up owning all together.... so the problem spirals and then starts to snowball.

Oh hurro!


Yup, we have the fixed portion of our mortgage carved into three separate chunks at 1yr, 2yr and 2yr9mth intervals - the 1 yr is doesn't come off until late Sept and that's only just over 10% of the total loan so fine to juggle that. But come late next year I'll be interested to see where we are at (I want to say "surely we'll be lower/off the peak" by then but you never know).

the extra interest you pay on your loans comes back to you in interest paid to you if you save your $$

NR, -as a society, yes, where borrowers are feeling pain , savers are rejoicing, but as individuals it makes little sense to have savings AND a mortgage. The interest you earn on savings (after witholding tax) in no way compensates for the interest you pay .

That is why I have another floating loan as part of my mortgage which although having a higher interest rate than the fixed portion is able to be paid back or drawn down as suits me. Naturally I pay this back as fast as I can. I do keep a some cash (in another bank) for an absolute emergency thing but to do so is actually costing me over 2% plus tax.

I see Westpac raised their rates today. my timing was once again, impeccable .

What does concern me tho is that they raised their long-term rates more than their short term rates changing the angle of the yield curve, and I think, implying that rates are likely to stay up for longer than expected.